Its preference for a 75 basis point (0.75%) increase in the base rate against 50 bp. on behalf of the US Federal Central Bank, Federal Reserve, expressed the president of the St. Louis Fed branch, James Bullard.
The member of the Federal Open Market Committee (FOMC), which makes decisions on the path of interest rates, noted that the Bank will have to drive interest rates by the end of the year to a range between 3.75% and 4% in order to to tame runaway inflation, which he noted has not yet peaked.
The US central banker estimated that it would take about 18 months for upward pressure on prices to recede near the Fed’s target of inflation near 2%.
He also called market expectations that the Fed would change course and return to a path of monetary easing “extremely premature,” while he called exaggerated fears of a recessionary effect on the economy due to escalating monetary tightening.
Bullard finally estimated that the growth path of the American economy in the second half of 2022 will be better than that in the first half of the year, when the US GDP also contracted for two consecutive quarters.
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